Purchasing Function : An Organization

The main elements of a supply chain include purchasing, operations, distribution, and integration. The supply chain begins with purchasing. Purchasing managers or buyers are typically responsible for determining which products their company will sell, sourcing product suppliers and vendors, and procuring products from vendors at prices and terms that meets profitability goals.

{Build the Supply Base: supplier selection1. supplier evaluation- find potential suppliers, supplier certification (qualification, education, certificationISO 9000,14000). 2. Supplier development- integrate supplier in system, quality require, product specs, schedule/delivery, procurement polices, training, engineer/production help, information transfer procedures. 3. Negotiation- significant element, strategies: Cost based price model (open books to supplier, based on time and materials) Market based price model (based on published, auction, index prices: commodities) Competitive bidding (most common, no longterm relationship, request for rfq). 4. Contracting- share risks, benefits, incentives. Centralized purchasing, E procurement (online catalogs/exchanges, online auctions).} Logistics MGT- obtain efficient operations through integration of all material acquisition, movement, and storage activities. Frequent for outsourcing, allow competitive advantage from reduce costs and improve customer service. 1.Shipping systems: truck(flexible, moves majority manufactured goods) rail( large loads, containers) Airfreight( fast/flexible light loads, expensive) water( used for bulky low value cargo, oldest way of transportation) Pipelines( transport oil, gas,

The procurement life cycle can be made up into 13 key stages. The stages I am going to follow the CIPS stages of procurement and supply management. (Cips.org, 2017)

| A company 's suppliers, their supplier 's suppliers, and the processes for managing relationships with them constitute

The topic selected is (Strategic Procurement & Supply Chain Management). For this study, we have selected Toyota Motor Corporations as our company of choice. Toyota is without doubt the best in the world, with its many philosophies and principles on how to make the best out of the least; JIT, lean production and elimination of waste and the desire for continuous improvement are just a few ways how Toyota has become the best in the auto industry. Toyota as a name, a company, and as a brand has become synonymous with Quality.

Strategic sourcing is the first thing that is combined with the strategic supplier management and there is the effective day to day purchasing with the outcomes of supply chain management. The organization is able to create and develop new advantages with better and effective roles as well as relationship. It chooses the innovation and leads to the marketplace with strategic efforts on sourcing.

Due to the fact that procurement strategies are the focal point in the planning stage of all business firms and is a vital

Unlike traditional supplier/buyer relationships that had a narrow focus, contemporarily such relationships are becoming more strategic thereby yielding adequate reduction of risk and good technological leverage etc. It should be recognized that this relationship is the most powerful process of consumer satisfaction.

The procurement section of Target’s supply chain is an essential part of how it replicate costs to customer requirements. The overall affiliation between customer fulfillment and the supply chain are closely linked to products that are designated based on benchmarks that have been appropriately matched to target costing structured with market criticism and feedback provided. When focusing on purchasing products to sell to customers, the organization selects and processes the best option that best matches Target’s

Labor-intensive purchasing process is an expensive and low value-added work. Currently, the company has no centralized management to perform strategic purchasing. It was a concern that whether employees would come up with speed to the dramatic changes coming from re-engineering. Some of multiple hand-offs between department look complicated and redundant. An example of solution would simplify the process from demand planning to raw material planning to be implemented by less employees within a close group. In addition, the organization should be re-designed to a more “customer oriented” to align with the turnkey

Value-Based Purchasing System was created and implemented by the Center for Medicare and Medicaid Services to link Medicare payment to value based systems to improve quality of care provided to patients in an inpatient or outpatient setting. Value-Based Purchasing Systems reward excellence in measuring and reporting in excellent health care delivery to patients. An effective Value-Based Purchasing System is an external motivator for providers to re-engineer the way health care delivery is approached. Healthcare facilities that adopt a Value-Based Purchasing System and score high and maintain a high score can benefit from incentive payments. The Center for Medicare and Medicaid scores hospitals on Achievement Points, Improvement Points, and

W.C. Benton, J. (2010). Purchasing and Supply Chain Management (2nd ed.). New York: McGraw-Hill Irwin.

to have good strategic development. Since these purchases are the main source of their business products, risk will need to be minimal.

For a purchasing operation to be effective it must adhere to some key points. A purchasing operation must identify the requirements of the user, effectively and efficiently evaluate the needs of the user, and identify suppliers that will meet the needs of the use. They must also develop agreements with those suppliers, develop ordering mechanism with the suppliers and ensure payment occurs promptly and determine that the need of the user was met.

Hill, Charles W. L. and Gareth R. Jones. Strategic Management: An Integrated Approach. Mason, OH: South-Western Cengage Learning.